About Money 101

A.B.C.D.E.F.G.H.I.J.K.L.M.N.O.P.Q.R.S.T.U.V.W.X.Y.Z

Z bond Also known as an accrual bond or accretion bond; a bond on which interest accretes interest but is not paid currently to the i nvestor but rather is accrued, with accrual added to the principal balance of the Z and becoming payable upon satisfaction of all prior bond classes. Z score Statistical measure that quantifies the distance (measured in standard deviations) a data point is from the mean of a data set. Separately, z score is the output from a credit-strength test that gauges the likelihood of bankruptcy. Zero coupon bond Such a debt security pays an investor no interest. It is sold at a discount to its face price and matures in one year or longer. Zero prepayment assumption The assumption of payment of scheduled principal and interest with no payments. Zero uptick Related: tick-test rules. Zero-balance account (ZBA) A checking account in which zero balance is maintained by transfers of funds from a master account in an amount only large enough to cover checks presented. Zero-beta portfolio A portfolio constructed to represent the risk-free asset, that is, having a beta of zero. Zero-coupon bond A bond in which no periodic coupon is paid over the life of the contract. Instead, both the principal and the interest are paid at the maturity date. Zero-investment portfolio A portfolio of zero net value established by buying and shorting component securities, usually in the context of an arbitrage strategy. Zero-one integer programming An analytical method that can be used to determine the solution to a capital rationing problem. Zero-sum game A type of game wherein one player can gain only at the expense of another player.

Glossary created by Campbell R. Harvey, Professor of Finance,
Fuqua School of Business at Duke University